Nokia's business-level strategy is supported by its functional strategy through the ways that its functional strategy complements its business strategy. For instance, Nokia uses several functional strategies such to produce quality phones and services at a low-cost price and to be a market leader through its innovations. Nokia also differentiates itself, a business strategy, by its emphasis on green technology and its environmentally friendly practices.
Nokia's functional strategies such as producing quality phones and services at a low-cost price while leading the market with its innovations help the company's business-level strategy. Nokia is able to produce many phones at a time which allows them to obtain economies of scale which also allows them to use a cost-leadership strategy. However, their focus to be innovative and their emphasis on going green and protecting the environment also allows them to differentiate themselves from their competitors.
Nokia’s cost leadership strategy allows it to garner a strong market share in global markets, especially those where high-end smart phones are unaffordable (4). Such markets include India, China, and the Middle East (4). Nokia’s global market share in the first quarter of 2009 was 41.2% (7). Research in Motion, known for the BlackBerry, had a 19.9% market share and Apple, with the iPhone, had a 10.8% market share during the same period (7). Targeting emerging markets allows Nokia to be a first mover, establishing its brand among those new markets.
A disadvantage to Nokia’s strategy is demand in established markets. While Nokia had a 40% market share in the American market in 2002, its market share slid to 7% by 2009 (3). A study by the NPD Group found the average price per handset to be on the rise, with features such as QWERTY keyboards experiencing a boost in demand (5). In contrast, Research in Motion held 43% of the U.S. smart phone market in January 2010 (6). Apple held 25.1% of the market in the same period (6). Losing share in developed markets such as the U.S. might explain its 3.9% decrease in global market share from 2008 to 2009 (7).
Nokia's functional strategies such as producing quality phones and services at a low-cost price while leading the market with its innovations help the company's business-level strategy. Nokia is able to produce many phones at a time which allows them to obtain economies of scale which also allows them to use a cost-leadership strategy. However, their focus to be innovative and their emphasis on going green and protecting the environment also allows them to differentiate themselves from their competitors.
Nokia’s cost leadership strategy allows it to garner a strong market share in global markets, especially those where high-end smart phones are unaffordable (4). Such markets include India, China, and the Middle East (4). Nokia’s global market share in the first quarter of 2009 was 41.2% (7). Research in Motion, known for the BlackBerry, had a 19.9% market share and Apple, with the iPhone, had a 10.8% market share during the same period (7). Targeting emerging markets allows Nokia to be a first mover, establishing its brand among those new markets.
A disadvantage to Nokia’s strategy is demand in established markets. While Nokia had a 40% market share in the American market in 2002, its market share slid to 7% by 2009 (3). A study by the NPD Group found the average price per handset to be on the rise, with features such as QWERTY keyboards experiencing a boost in demand (5). In contrast, Research in Motion held 43% of the U.S. smart phone market in January 2010 (6). Apple held 25.1% of the market in the same period (6). Losing share in developed markets such as the U.S. might explain its 3.9% decrease in global market share from 2008 to 2009 (7).